Jagdish Bhagwati, The Wind of the Hundred Days: How Washington Mismanaged Globalization.

Jagdish Bhagwati, The Wind of the Hundred Days: How Washington Mismanaged Globalization, The M.I.T. Press, 2001.

Worldly View Of Globalization

Jagdish Bhagwati is a leading economist of international trade--many think the world's leader in the field--and also a public intellectual and evangelical free trader. This book collects forty-six pieces of varying length, published mostly in 1997, 1998, and 1999, consisting of lectures, articles for Festschriften, book reviews, letters to The New York Times, The Wall Street Journal, and the London Financial Times. A number of lectures were delivered when Professor Bhagwati was being awarded a prize. He was recently elected to a high competitive office in the American Economic Association. He consulted for two years with the World Trade Organization. He writes with panache.

Globalization in his view consists of free trade, direct foreign investment (by companies), and immigration, but not short-term capital movements, which are unstable. He strongly opposes "linkages" that tie measures for freer trade, to provisions in human rights, labor rules, and environment, anathema to many Republicans and officials of developing countries, who view them as disguised protection. In his view, these other goals in foreign policy should be treated separately from trade by other inter-governmental bodies and non-governmental organizations (NGOs) on issues such as preserving culture by supporting French movies and Canadian magazines threatened by American colossi. He would leave child labor, for example, to the International Labor Organization, though it has been working on the problem since its founding in the 1920's. (He notes that there were 250 million children at work throughout the world in 1996.) He even states that parents in India and Bangladesh need the money and that the alternative to child labor may be child starvation.

A strong argument against linkage comes in Jan Tinbergen's On the Theory of Economic Policy (North Holland Publishing Co., 1952), which is that one needs as many tools as one has goals, or "you cannot kill two birds with one stone." There is, however, something on the other side, in Harry Johnson's and Bhagwati's theory of the "second best." If the best tool fails to work or work is unavailable, try the second best, and so on down to the nth best. Bhagwati opposes tying human rights to China's admission to the World Trade Organization, but does note that the embargo on trade with South Africa did work to kill apartheid.

A weaker attack on linkages is that the United States is not without sweatshops, child labor, crony capitalism, congested hog pens, eggs produced by hens in cramped batteries, toxic waste, clear cutting of forests, etc. "Let him among you who is without sin cast the first stone." But "tu quoque" (You're another, and so is your old man) is not compelling. Those in the United States who worry about human rights on the whole are not those here who violate them.

Many theorists allow for limited exceptions to free trade. Adam Smith favored the Navigation Acts of Britain as a nursery for sailors needed for national defense. It is hard to make a case for free trade in opium, and may in future be the same for tobacco. Canadians Harry Johnson and Albert Breton were both prepared to abandon some of the income from trade to support the public good of national identity. Bhagwati disagrees at some length with the importance which David Landes attaches to culture, and in fact expresses "astonishment, anguish, and outrage" at two world-rank economists who worried about time spent in India debating questions like concessions to multinationals and whether Indians should drink Coca-cola, rather than on education, healthcare, and social inequalities.

Bhagwati's support of multinational corporations is a switch on the arguments of decades ago, illustrated by successive books by Raymond Vernon: Sovereignty at Bay: The Multinational Spread of U. S. Enterprises (Basic Books, 1971) and Storm over Multinationals: The Real Issues (Harvard University Press, 1977). At the time of the explosion of the Union Carbide plant in India, which killed hundreds of people, the corporation was damned and countries sought capital from abroad in the form of debt. The troubles brought on by the East Asian financial crisis in 1997 changed that. Debt, especially short-term capital, is excoriated, direct foreign investment (DFI) embraced.

Professor Bhagwati's attack on the Wall Street/Treasury push for open financial markets in developing countries is somewhat intemperate, and like some of his rhetoric fails fully to persuade. Arguments of others are "fatuous," "ridiculous," "simple ignorance," or "prejudice." The failure of the Seattle WTO conference was willful on the part of Clinton, and as for characterizing his trade policy as successful, "there is nothing farther from the truth."

At the same time, Bhagwati writes scintillatingly: Time is left for few examples: "Gore's unrivaled ability to simulate rigor mortis"; "A Christian Congressman would provide a missionary to a cannibal for breakfast if that would make him a constituent"; the U.S. of pill-poppers: "silicone implants and Viagra, leading to a nation of artificially-enhanced women pursued by artificially-aroused men."

While I mostly indulge in more scholarly language, I favor many, even most of Bhagwati's positions. He is too hard on debt capital perhaps, ignoring the spread of techniques for relief for over-indebted developing countries, and the success of the IMF, despite his and other strictures, in reviving most of East Asia. But on "fair trade" (disguised protection), cries for "a level playing field," the superiority of multilateral to unilateral measures, the need for assistance of those hurt by freer trade, as some are in the short run, I concur. A most enjoyable read, but doesn't get carried away.

Charles P Kindleberger is Professor Emeritus at M.I.T.